Item 3: Ratification of MWMC Budget

Home Browse Search

Metropolitan Wastewater Management Commission Reserves REGIONAL WASTEWATER PROGRAM RESERVES The RWP maintains reserve funds for dedicated purpose to sustain stable rates while fully funding operating and capital needs. Commission policies and guidance, which direct the amount of reserves appropriated on an annual basis, are found in the MWMC Financial Plan (2005). Further details on the FY 11-12 reserves are provided below. OPERATING RESERVES The MWMC Operating Budget includes four separate reserves: the working capital reserve, rate stability reserve, rate stabilization reserve, and the operating reserve. Revenues are appropriated across the reserves in accordance with Commission policy and expenditure needs. Each reserve is explained in detail below. WORKING CAPITAL RESERVE The Working Capital Reserve acts as a revolving account that is drawn down and replenished on a monthly basis to provide funds for payment of Springfield Administration and Eugene Operations costs prior to the receipt of user fees from the Springfield Utility Board and Eugene Water and Electric Board. The Working Capital Reserve is set at $900,000 for FY 11-12, $200,000 of which is dedicated to Administration and $700,000 is dedicated to Operations. RATE STABILITY RESERVE The Rate Stability Reserve was established to implement the Commission’s objective of maintaining stable rates. It is intended to hold revenues in excess of the current year’s operating and capital requirements for use in future years, in order to avoid “rate spikes.” The amount budgeted on an annual basis varies in response to the variability of actual revenues net of expenses, and annual budgeted amounts for the operating and capital reserves. RATE STABILIZATION RESERVE The Rate Stabilization Reserve contains funds to be used at any point in the future when net revenues are insufficient to meet the bond covenant coverage requirement. The Commission shall maintain the Rate Stabilization account as long as bonds are outstanding. In FY 11-12 no additional contribution to this reserve is budgeted and the balance at June 30, 2012 will remain at $2,000,000. Page 20 DRAFT FY 11-12 BUDGET AND CIP